How did clothing workers money go missing?

South Africa

The ReDress Consultancy comments.

The union now wants “every single cent returned.” Are you telling me they had no idea about the investments?  I find it astonishing that the union has not made one statement since this  gross mismanagement of workers funds was leaked to the media in May 2011.  Now they are acting all shocked. How quick they are to condemn, prosecute and accuse certain “bosses” of exploiting the poor worker.  Sactwu needs to explain how they allowed this to happen.

Both the union and the bargaining council are boastful that roughly 1400 workers have already lost their jobs and over 2000 more stands to join the unemployed masses within the next few weeks because “owners were adamant they would never comply with the minimum wage,” (Business Report, 27 May 2011).  In effect 15000 to 20 000 people directly and indirectly may be affected through the loss of over 3000 jobs.  How many of these retrenched workers are Sactwu members and how does this financial debacle affect them? “The guilty must go to jail.”  It will depend on who is guilty.

Pension fund drained after loans

---

Factory workers are demanding R1-billion worth of assets from a company that invested its pension money in a scandal involving Deputy Minister of Economic Development Enoch Godongwana.

---

Ironically, Godongwana is head of the ANC's economic transformation commission, tasked, as deputy to Ebrahim Patel, with reviving the fortunes of factory workers.

Today the Sunday Times can reveal that Trilinear Capital, which manages provident funds for the South African Clothing and Textile Workers Union (Sactwu), has been ordered to return the union's money.

Lawyers acting for the trustees of the union fund say the initial investment of R420-million made in 2007 is now estimated to be worth over R1-billion. The trustees sent the company a letter late on Friday afternoon ending all business dealings "with immediate effect".

Patel was once general secretary of Sactwu while Godongwana was a senior executive of the National Union of Metalworkers.

The saga follows Trilinear granting a series of loans totalling R93-million to the company of Godongwana's wife, Thandiwe. Of this, R27-million was channelled to three companies in which Godongwana and Thandiwe were listed as directors. Godongwana resigned after joining cabinet in 2009.

Thandiwe's company, Canyon Springs Investments 12, now faces liquidation for failing to pay back the money. The union's trustees lodged an application in the Cape Town High Court to liquidate the company which was, incredibly, given a R150-million loan facility. This was supposed to be used to buy an unspecified listed company - but this never happened.

And, no loan agreements were signed with Canyon Springs for much of the money, according to court papers. The money was to be repaid within 36 months.

Cosatu general-secretary Zwelinzima Vavi described the deal as "shocking".

"If this is true, I'm shocked by a number of things. Firstly, my heart is down because textile workers are among the lowest paid in the country, with some of them earning as little as R280 a fortnight," said Vavi. "And, for a company to see the poor workers as a cash cow, that's just immoral and disappointing."

The Godongwanas have not responded to questions sent to them last week Friday.

The money given to Canyon Springs belongs to 20000 factory workers earning an average of R700 a week. Workers contribute 6.5% of their salary to the provident fund.

The R93-million loan is made up of contributions by five Sactwu provident funds: the Cape Clothing Industry, the Textile Industry, the Textile Open, the Textile and Allied Workers and Pep Limited. 

Court papers show how Canyon Springs received 11 separate payments ranging from R200000 to R30-million between March 2007 and December 2009. The company received a staggering R58-million before any official loan agreement was signed.

Sactwu general-secretary Andre Kriel said the union now wanted "every single cent" returned. "Our investigation is not yet complete but no stone will be left unturned. If any guilt is proven, the guilty must go to jail for a long time," he said.

Barnabas Xulu, from law firm Xulu Liversage, which represents the trustees, said a decision was taken on Thursday to terminate the relationship with Trilinear. Xulu said the trust had invested R420-million with Trilinear - including the R93-million loan given to Canyon Springs. "On Monday at 10am we expect them to hand over everything that belongs to the trust."

The Sunday Times has also established that Trilinear, owned and run by Samuel Buthelezi, had its Financial Services Board (FSB) licence suspended between November 2007 and May 2008. Yet it was still able to handle the union's money, even advancing R4-million to Canyon Springs during this period. FSB spokesman Logan Ramalu confirmed Trilinear's licence had been "suspended on 15 November 2007 for non-material non-compliance and was lifted on 23 May 2008". Buthelezi declined to comment.

In 2009 Godongwana resigned from Pan African Benefits Services, Iboma Call Centre and Iboma Properties - the companies that received the R27-million.

At the time he was listed as a director of 24 companies, but denied the figure, saying some of them are of the same group. Former Sactwu consultant and union employee Richard Kawie is also listed as a director of Iboma Properties. The union said Kawie carried out various functions on provident funds "after his departure". Court papers indicate he was allegedly paid R8-million via Canyon Springs. He denied any allegations of impropriety.

Reference: TimesLive, 29 May 2011

By ISAAC MAHLANGU

Pension money missing in SA clothing industry

South Africa

The clothing union, Sactwu, is “concerned” about the missing funds. Concerned!!! They should be outraged. It is no good to appoint their own lawyer to look into this matter. The ReDress Consultancy has repeatedly called for an independent audit of the entire bargaining council’s financial managerial systems. According to the Cape Times, (Textile pension funds missing R100m, 26 May 2011), “the interests of thousands of workers are at stake.”  In the same report, Sactwu General Secretary, Andre Kriel said, “no stone will be left unturned to safeguard the interests of our members.”

The ReDress Consultancy has learnt of a new twist in the ongoing saga taking place in South Africa’s beleaguered clothing sector. According to our information the bargaining council now deems that the December resolution which activated the new Phase-in policy removes the need for clothing companies to apply for exemptions. This contradicts the bargaining council’s former position when it said (Business Report, 5 September 2010) that “employers had the option to apply for exemptions.” Does this imply that employers have no recourse?

Over R100m of SACTWU pension money allegedly missing

Company linked to deputy minister allegedly involved.

JOHANNESBURG – Attempts, which include a liquidation application, are apparently being made to recover about R100m of workers pension monies which allegedly have gone up in smoke, according to a sworn affidavit filed in the Cape High Court.

“A good chunk of it has gone into smoke ... inclusive of interest the amount should be a good R130m according to the contract agreement,” reveals Siphamandla Jama, the author of a sworn affidavit which forms part of the liquidation application.

In the affidavit it is noted that Trilinear Empowerment Trust (administrator of workers’ provident funds) advanced about R87m of SACTWU (South African Catering and Textile Workers Union) pensioners’ money to Canyon Springs about four years ago. According to the affidavit, the amount totals over R100m including fees and interest. Moneyweb asked parties cited in the liquidation application to give an indication where the pensioners’ money was, none were able to do so.

The trustees of the Trilinear Empowerment Trust are Vuyisile Kona, the chairman of the trust, Sharon February, Monroe Mkaliphi and Sibusiso Gamede, newly appointed CEO of Pinnacle Point.

According to the affidavit, Canyon Springs is allegedly unable to repay the money. When Moneyweb queried Canyon Springs, we were told the company partly belongs to the family of Deputy Minister of Economic Development Enoch Godongwana.

After an independent search, CIPRO records listed Canyon Springs directors as Mohan Patel, the managing director and Thandiwe Godongwana, the wife of Deputy Minister of Economic Development Enoch Godongwana.

SACTWU is reportedly concerned about the matter. General Secretary Andre Kriel said the union has hired a law firm to conduct a thorough forensic investigation in order to see what action can be taken to safeguard workers’ interests. With liquidation in the picture this raises a concern on whether the millions of rands belonging to thousands of workers will be totally recovered.

The beneficiaries of the trust include the Cape Clothing Industry Provident Fund, Textile Industry Provident Fund, Textile Open Provident Fund, Textile and Allied Workers Provident Fund and Pep Limited Provident Fund.

According to the affidavit, the story goes that a loan agreement was allegedly reached by Trilinear Chairman Sam Buthelezi and Patel. Buthelezi allegedly signed on behalf of the trustees as the trust has an investment management agreement with Trilinear. It is alleged that Trilinear never informed the trustees about the transaction.

Jama, the author of the affidavit and former head of alternative investments at Trilinear, alleges that in his interactions with Canyon Springs MD Patel, there was no contestation that Canyon owes the trust over R100m. Jama points out that the first drawdown took place on March 20 2007 in the amount of R30m followed by many others.

“The loan has never been repaid. Not a single cent has been repaid. The deadline to repay was around March 2010. Not a single cent has been repaid that’s why now there has to be all of these things of liquidation and so on,” Jama added.

The former Trilinear employee points out in his affidavit that he uncovered that “as security of the loan” it was agreed that “the applicant was to take up 20% shareholding in the respondent.

“As far as I could ascertain, this never transpired. The trust thus holds no security for its claims against the respondent”, Jama said. 

Asked why he had left Trilinear, he said he resigned after his investigations revealed worrying concerns about pensioners’ monies. He claims to have found himself in an awkward position as the chairperson of Trilinear Buthelezi was allegedly friends with someone suspected of irregular behaviour.

Buthelezi was sent a list of questions, asking him among other things :

1)      Where pensioners’ money had gone to?

2)      Why Trilinear lent Canyon Springs workers’ money?

3)      How lending money to Canyon  benefitted workers/pensioners ?

4)      And why Trilinear couldn’t tell Canyon to go to a bank for a loan?

In response, Buthelezi’s attorney’s Bellairs and Solomons told Moneyweb:

“In terms of our client’s contractual arrangements, it is not entitled to give information of the nature herein requested to third parties. Whilst our client is at present is not a party to the application, it is giving consideration to make an application to intervene in the proceeding and the matter is therefore sub judice.

“In the circumstances it is not appropriate to respond to media requests for information relating to the proceedings. It should not be inferred that our client agrees that the allegations made in the application are true. In the circumstances, our client declines to reply to the queries made by you,” Buthelezi’s attorneys added.

The deputy minister did not respond to questions sent by Moneyweb and promised to talk on Thursday morning. Moneyweb has been calling and leaving messages for the MD of Canyon Springs, Patel, since Sunday. He has not replied.

Xulu Liversage Inc, the lawyers who have filed papers on behalf of the trustees said opposing papers by Canyon Springs were supposed to be filed on Thursday, May 19 in terms of the court order, but nothing had been served. The matter is expected to be heard on June 9. Late on Tuesday no indication to serve opposing papers had been made to Xulu Liversage.

Jama also alleges Richard Daniel Kawie, former national benefits co-ordinator of SACTWU, allegedly “became one of the main protagonists as to how the monies lent to the respondent were expended, with much of it, some R8m to himself, directly and/or indirectly. Kawie also shares the same business address as the respondent [Canyon Springs].

“Kawie has also apparently played a leading role in the appointment of senior management of the subsidiary of the respondent [Canyon Springs], Pan African Benefit Services (PABS), which as far as I could establish has potential to be a successful business”.

PABS referred questions to Canyon Springs.

The affidavit also alleges that Kawie ensured that the Canyon Springs lent millions of rand to a company, which allegedly belongs to Kawie’s cousin. The affidavit calls for Kawie to be investigated urgently.

Moneyweb spoke to Kawie on the weekend and on Wednesday and he strongly denied the allegations. He denied any wrongdoing on his part, stating that as an activist and former union man he would not dare steal from the worker as it was the same as stealing “from your mother”.

Kawie told Moneyweb that he is considering an application for defamation and has appointed lawyers to advise him. He said there could be a political agenda to tarnish his name.

Kawie was also confronted by his SACTWU comrades. He said he felt “deeply aggrieved with what is said”. He reiterated to the union that “whatever is said is unfounded and untrue”.

Reference: Moneyweb, 26 May 2011

South African clothing workers pay the price

CCN Reports on South Africa's embattled clothing sector

Go to this link to watch video

South African workers pay the price for cheap Chinese imports

Kwa-Zulu Natal, South Africa (CNN) -- China is now South Africa's biggest trading partner. But cheap Chinese imports are threatening local industries and thousands of ordinary South Africans are paying the price.

Trade between South Africa and China increased from more than $8 billion in 2006 to a record $20 billion last year. As a result China has now overtaken the U.S. as South Africa's biggest trading partner.

Unlike Europe and America, China continued to invest in South Africa throughout the global economic crisis, lessening the blow to the South African economy.

However, its investment is proving to be a double-edged sword because South Africa's once successful textile sector is now struggling to cope with cheap Chinese imports flooding their market.

The repercussions are being felt across the country as thousands of workers struggle to keep their low-paid jobs.

Kwazulu-Natal, a rural village near South Africa's west coast, initially appears far removed from global events and their consequences. But the impact of China's growth is being harshly felt in this remote corner.

Sindi Mkalipi, a local clothing factory worker, irons 70 pieces of clothing an hour to earn $34 a week. She wakes up at 5:30 every morning to begin her hour-long journey to the factory.

She is the only employed member of her family and with seven mouths to feed her job is vital to their survival.

"We earn very little, but at least I can buy a pack of maize meal, some chicken pieces and a bus ticket," she says. "It's better than not earning anything at all."

In a country where more than a third of the population is jobless she is only too aware that many people would be willing to take her job.

The South African government expects a machinist in this kind of factory to earn a minimum of $68 a week -- twice what Mkalipi earns.

But Alex Liu, Mkalipi's boss and the factory owner, says he cannot pay that and stay in business.

Liu came to South Africa a decade ago with other members of the Chinese Chamber of Commerce and Industry, to exploit business opportunities. The irony of the situation is not lost on him.

"Some of our members are really considering to close down here and relocate their factories to other neighboring countries, like Lesotho or Swaziland," he says.

In neighboring Lesotho, the minimum wage is $32 per week.

But in South Africa manufacturers are either trimming their workforce or closing down entirely.

According to the South African Clothing and Textile Workers Union, in the last three years more than 18,000 people have lost their jobs in the sector.

With employers like Liu calling for a lower minimum wage, South Africa finds itself in a situation where it is desperate to create work, but unable to guarantee what the government considers decent pay.

However, South African Trade and Industry Minister Rob Davies believes that although China may be shrinking the local clothing sector, South Africa and the continent at large benefit from its huge mining investments.

"China and the industrialization of China is what is propelling the mineral boom and its one of the major areas in which Africa is experiencing a growth surge which is, in fact, placing Africa as the next growth story after China, India and Brazil," he said.

That is probably of little comfort to South Africa's ailing textile industry, or Mkalipi, and other workers like her.

The political T-shirt could have helped local industry

The ReDress Consultancy comment:

The 121 political parties and 748 independent candidates who participated in the recent municipal elections that took place in South Africa could have had a colossal constructive impact on the local clothing sector just by having their campaign T-shirts designed, and made in South Africa using local textiles. Two years ago it was reported that ANC T-shirts had been made in China, and I was informed that the DA had municipal campaign T-shirts made in India.   The clothing and textile sector is under immense strain from imports and further factory closures and job losses can be expected as a consequence of the wage negotiations currently taking place in this industry sector.  The clothing union, Sactwu, has demanded all apparel manufacturers to meet the wage Phase-in Agreement or face closure.

Why did Sactwu not insist that all political parties have their election campaign T-shirts made in South Africa?  How can they expect South African consumers to support the local clothing and textile industry when political parties don’t?

If we take the two bigger political parties: The ANC and DA and estimate that they each had a conservative 25000 T-shirts made at a reasonable cost of R10 each then one of these parties could have contributed to the salary of a qualified machine operator for nearly 10 years if the clothing operator earned the prescribed year end wage of R465 a week.

Over two million in much needed revenue could have been injected into the clothing sector if we estimate that each of the 121 parties that campaigned had made 2000 shirts at the same cost of R10.each.

Sadly though, I am sure most political T-shirts were not made in South Africa, however, to be fair if any political party or one of the independent candidates were proudly South African then well done.

Clothing union not worried about UCTA

South Africa

Comments by The ReDress Consultancy

It just gets more confusing. 

The media and communications strategy of the concerned parties need urgent attention and I implore South Africa’s media to begin to excavate and unbundle broad sweeping statements made by the union and even industry bodies and do background research to verify such statements or ask for evidence.

The ReDress Consultancy has consistently reflected on the various contradictions in regard to the wage debacle   made public through media outlets. Public opinion and even industry development as well as relationships between labour and industry is based and formulated through public discourse via the conduit of the media.

This article hints that UCTA has been invited to the negotiating table even though it is not yet registered. This contradicts the union’s previous statement that only when UCTA is a registered body will the union contemplate any formal engagement.

The consistent claim by the union that clothing companies that fall under the auspicious of the UCTA and in particular clothing companies based in New Castle are paying workers R150 to R250 a week requires investigation by the media. The union has been asked repeatedly by The ReDress Consultancy to provide evidence and not only name the companies but indicate where they are located. However, we have not seen any evidence of these claims made public.  This is where investigative journalism comes into play.

 Sactwu set to make its case for wage increase with CCMA

The Southern African Clothing and Textile Workers Union (Sactwu) is set to make its case for an 8% to 15% wage increase when it meets the employer bodies today at the industry’s bargaining council in Durban.  “We have entered into a facilitation processes with the Commission for Conciliation, Mediation and Arbitration (CCMA) and we will be tabling our demands today. 

“Part of our demands include wage increases, improvement of social benefits, provident funds and annual bonuses,” Wayne van der Rheede, Sactwu’s deputy general secretary, told The New Age yesterday.  “We are prepared and ready to negotiate in line with the mandates we received from our members. It will be a give and take situation and we believe we will make progress regarding that,” he said.

Sactwu represents the interests of more than 100000 clothing and textile workers nationwide. Van der Rheede described last year’s settlements – 6.5% for workers in urban areas and 14% allocated to those in urban areas – as an inflation plus-based settlement, that worked favourably for workers and their needs.

“This year, we will push for 8% for metro workers and 15% for non-metro workers,” he said. The union was expected to discuss its proposal with the employer bodies – the Apparel Manufacturers of SA (Amsa), the Coastal Clothing Manufacturers Association and the United Clothing and Textile Association (UCTA).

This is despite protests by the Durban-based UCTA that it would boycott the outcome of the new wage negotiations because the old minimum wage dispute was not resolved. The UCTA and the bargaining council have clashed since last year over the payment of a minimum wage. The bargaining council has been cracking down on noncompliant factories after a decision to allow these companies to phase in compliance.

Yesterday, UCTA chairperson Ahmed Paruk demanded the suspension of the negotiations, arguing that the association’s 300 members were not happy with the government’s phase-in compliance policy and could not afford the proposed new wage. “I am saying let us come to a table and find a common ground about last year’s resolutions, otherwise we won’t be taking part in today’s negotiations,” he said.

According to Paruk, the government is demanding noncompliant factories to now be 70% compliant, 90% compliant by the end of the year, and 100% compliant in 2012. “This industry does not allow us to come to that level,” he said.

He concurred that most UCTA members could not meet the terms of the government’s phase-in compliance policy and have submitted documents to the Department of Labour raising such concerns.

Van der Rheede said Sactwu was not moved by UCTA’s position and the negotiations would go ahead without them. “Of course, we are not worried about their position. They are representing a bunch of noncompliant factories that are not paying workers minimum wages. UCTA members are exploiting workers by paying them R150 to R250 per week,” he said.

He said in terms of the labour regulations, a minimum wage for qualified clothing machinery workers in rural areas should at least be R489 per week, and R740 for a machinery worker in an urban area. 

But Paruk insisted yesterday that worker salaries in South Africa were better than those in countries such as Lesotho. “The industry’s wage in Lesotho is R850 per month and here in Durban, we are paying urban workers R450 per week, and R280 for non-urban workers.

“UCTA believes that if action is taken against the hundreds of clothing companies that cannot meet the terms of the phase-in compliance policy, thousands more people will find themselves unemployed and the financial consequences will prove to be devastating to families, communities and the local and national economy,” he said.

Paruk said the UCTA was formed to bring together, under one umbrella organisation, the various national clothing and textile organisations and allow this sector, which is noncompliant, to speak and engage with labour, government and within the industry as a unified collective. “The UCTA feels that it has a legitimate voice and wishes to have meaningful dialogue with Sactwu and the national bargaining council for the clothing manufacturing industry, and its priority is to find an equitable and sustainable solution to the current phase-in compliance policy,” he said.

The UCTA chairperson said he believed the sector could contribute to sustainable manufacturing output, create employment opportunities and skills development and have a meaningful contribution to the economy, if it was allowed to operate “unburdened by polices” that had a detrimental effect on its operational abilities.

Amsa and the clothing manufacturers association could not be reached for comment on Wednesday.

Reference The New Age, 19 May 2011

Clothing wage talks begin

South Africa
Wage negotiations in the clothing sector are to begin within a volatile climate.

Comment from The ReDress Consultancy:

It is a noble stand that the United Clothing and Textile Association (UCTA) will not accept “the outcome of new wage negotiations,” however, the law is in favour of the union and bargaining council which declares that the collective agreement in regard to the National Bargaining Council for the Clothing Manufacturing Industry is automatically expended to all employers in the industry.  If this were not the case, non-compliant companies, would not be currently waging the ongoing interchange in regard to wages with the union and the bargaining council. 

In excavating this article I have found, in my opinion, some inconsistencies.

On the 24 March this year, the clothing union (Sactwu) released a statement saying, “A large group of clothing employers, organised under the auspices of a national employers' association called the Apparel Manufacturers of South Africa (AMSA) has threatened to boycott this year's clothing wage negotiations.”  The union statement went further explaining that the “clothing bosses” said they should not “be required to present themselves for wage negotiations this year, due to the extent of wage non-compliance in the industry and the fact that the union has not accepted their proposal for a 'new wage model' for the industry.”

Of course, we can unpack the meaning of “threatened.” However, the mere fact that AMSA felt compelled to disclose their feelings to the union means they initially felt it imperative to let the union know that they were contemplating boycotting the forthcoming wage talks. However, this article clearly defines that AMSA has had second thoughts and will take part in the discussions. I do endorse AMSA’s statement that labour alone cannot define wage hence the need for negotiations, however, the outcome of any negotiations will preference the requirments of a minority of clothing companies and place even further strain on companies falling under the auspicious of UCTA.

The United Clothing and Textile Association was officially launched in February 2011, and is currently taking steps in accordance with the labour law to become a registered industry representative body.  The objective is for UCTA to join the bargaining council  which will be welcomed by the clothing union who said on the 30 March 2011, “once UCTA is a legally registered employer association,  [it should] join the clothing bargaining council as a party employer’s association [ and then]  SACTWU would without hesitation agree to enter into negotiations with UCTA, to explore how their concerns could be accommodated.”  UCTA, has not been in existence for two years as alluded to in this article.

The union is asking for a nearly 20% increase in wages.  However, I also have to ask will the R90 million in workers’ provident fund that was lost be discussed and furthermore, will the union compensate any decrease in their prescribed wage increase if “clothing bosses” take a 30% cut in wages.  The next few days will be hard negotiations within a volatile environment, whatever, the outcome, there is no doubt that there will be an outcry from the industry and we could see even further clothing companies closing or an increase in retrenchments.

Textile employers to boycott wage talks

The United Clothing and Textiles Association (UCTA) would not accept the outcome of the new wage negotiations now under way at the bargaining council until the minimum wage dispute was resolved, UCTA chairman Ahmed Paruk said yesterday.

Paruk also claimed that other employer organisations in the industry had taken a similar position.

But Johann Baard, the executive director of the Apparel Manufacturers of SA (Amsa), denied that it would boycott negotiations for new wages.

Wage negotiations will take place in Durban tomorrow and on Friday. The increase will be implemented in September.

“We can’t accept the new wage before the old issue (minimum wage) is resolved,” Paruk said.

The UCTA and the bargaining council have clashed since last year over the payment of a minimum wage, which increased to R336 a week in April. The bargaining council has been cracking down on non-compliant factories after a decision to allow these companies to phase in compliance.

There are 300 non-compliant factories represented by the UCTA. The bargaining council has been inspecting 416 non-compliant factories since last month and has closed some in the process, although others have also reopened.

The non-compliant factories employ at least 14 500 people and owe workers R86 million in short wages from September 2008 to September 2009.

Last year, it was agreed that factories must start paying a minimum wage of R336 a week by the beginning of April, R465 by the end of the year and R516 by April next year.

Baard said Amsa could not support the UCTA’s call to shun negotiations because it would mean labour alone would decide wages for the industry.

“We have invited the UCTA to the bargaining council for the past two years because if you are in the bargaining council, you can influence events instead of shouting from the sidelines after the events,” he said. “Precisely by engaging in the wage negotiations, we are trying to find a new wage model for the industry.

“We agree with the UCTA that the current wage model is not sustainable and it is undesirable to close companies down but it is not Amsa’s fault that these companies are closing down,” Baard said.

Wayne van der Rheede, the deputy secretary-general of the Southern African Clothing and Textile Workers Union, said the union was not concerned by the UCTA’s position as it was not part of the bargaining council.

Paruk said its lawyers had asked the bargaining council for more information on the compliance assessments.

Bargaining council national compliance manager Leon Deetlefs said yesterday it was still collating information about the assessment and would have an update tomorrow. - Business Report

Reference Business Report, May 18 2011

By Slindile Khanyile 

SA clothing workers speak

Clothing Industry -Government policy in Newcastle

Waging a battle

Lise Pretorius

Thursday, 12 May 2011

What emerges in Newcastle is that government policy, however well- intentioned, is not elcomed by those who face poverty if their low-paying employers are forced to close factories.

The disarray in Newcastle is the latest development in the highly politicised debate over decent wages versus jobs, which has been hanging over SA’s clothing industry for more than a year . 

Simunye is owned by Alex Liu. He is the chairman of the Newcastle Chinese Chamber of Commerce and interim vice- chairman of the United Clothing & Textiles Association (UCTA), which represents the noncompliant companies.

To read the entire article click here.

Alex Liu speaks about the clothing industry

8 May 2011

The ReDress Consultancy recently spoke to Mr. Alex Liu, the chairperson of the New Castle Chinese Chamber of Commerce and Industry and the "hero" of South Africa's clothing industry.  Last year the clothing union, Sactwu awarded him the "Broken Brick" award for the "worst employer" in the clothing sector-an insult if ever there was one. The ReDress Consultancy urges clothing employers to award him "a working sewing machine" for his continual steadfastness in this battle of the sewing machines.

Mr. Liu is the chairperson of the New Castle Chinese Chamber of Commerce and Industry and Vice Chairperson of the United Clothing and Textile Association speaks to The ReDress Consultancy.

1. The ReDress Consultancy:  The decision to target your factory first by the Bargaining Council seems as though they are sending you a message. Would you say this is right?

If NBC could prove that my factory is the worst paying factory (paying the lowest wages) or the worst offender (holding a big fine), then I cannot say more.

Yet the truth is that we are paying 10~30% higher than most of the other factories here, the writ of execution against my factory is (R460,000 compared with most of the others between 1.5 to 4.5 million). NBC should give the factories an explanation as what measurements they had to decide which factories to close down first.

However, if NBC is determined to close down ALL non-compliant factories, I don’t have problem with the action against me, as long as it’s not a selective action.

2. The ReDress Consultancy:  You mentioned that the Bargaining Council action seems to be a systematic attack against your members whereas there are companies within the New Castle region that are paying even lower wages but have not been targeted by the Bargaining Council. Is this correct?

Yes, that is correct. I had a personal conversation with a SACTWU official in Newcastle who also admitted that. But he told me he will deny it if he is asked by the media.

3. The ReDress Consultancy: Can you tell our readers how many factories were affected today and how many more factories do you expected to be shut down in the New Castle region?

They did 2 on Tuesday. In spite of utmost efforts to calm the workers, there was a riot in Starfair. The sheriff may begin with others today and tomorrow.

4. The ReDress Consultancy: Roughly how many workers have been affected by this action and what have employers told their employees?

500 today and estimated 1,200 in other 4 factories.

5. The ReDress Consultancy: What is your understanding of the mood of the employees, are they in favour of factories been shut-down or are they against such action and what are they intending to do?

As I am writing to you, there are more than 100 ppl waiting outside the gate to be interviewed by the new company formed by our management committee. If we are paying terribly, why would they come back and hope to be re-employed by the new company?

6. The ReDress Consultancy: You have indicated that there is a possibility of most factories in the New Castle region shutting down operations in solidarity with the factories already mentioned is this true? Do you think other regions will do the same?

NCCCI held a meeting last night and all of our members are adamant to a shut down on Thursday and Friday. The other region may follow.

7. The ReDress Consultancy:  This is the first of a nationwide crackdown by the Bargaining Council which other areas do you think they will target after New Castle?

NBC has never revealed what measurements they’ve put in place to determine which factories to close down. As Mr. Leon Deetlefs mentioned in the media that he reckons there’ll be 70% of non-complaint factories fail to reach 70% legal wages when they complete the investigation.

8. The ReDress Consultancy: What action will you and the affected factories now take?

I am still acting according to our initial plan to let our management committee take in charge and decide if they want to re-open and operate. I have other business which sustains my personal living. The main reason why I am still standing and fighting this battle is my commitment to the workers and to my members of the chamber. I want to provide opportunities for those who want jobs, I want to show my members that I am still with them fighting against this manipulated NBC system.

9. The ReDress Consultancy: Do you still believe that there is an opportunity to address this situation in an amicable manner and what message would you like to send to the Bargaining Council and the Union (Sactwu)?

The future is dark.

It is ironic that in the ‘Year of Job Creation’, NBC and SACTWU are destroying jobs in the clothing industry.

10. The ReDress Consultancy: There is still a perception and this is influenced through the media and perpetrated by the union that it is only Chinese owned factories they are underpaying their workers.  What do you say to such misguided notions?

Chinese community is the backbone of the economic development of Newcastle. But Chinese clothing factories is only small percentage of the whole clothing industry (my estimation is 15~25% maximum). The misguided notion may have huge impact to Newcastle should NBC shut down factories in Newcastle. It will also have negative impact to the further foreign investment from China if Chinese investors find out that they are not welcome here.

We thank you for your time.

Support for New Castle Clothing Companies

The New Castle Business Unity in an open letter expressed their support to the clothing companies in their locality and expressed their concerns about the consequential economic and social impact of shutting down factories will have within New Castle.

5^th May 2011

 Dear sir,

The Newcastle Business Unity, at its meeting on 5/5/2011, recorded its concern and sympathy with the Chinese business community for not reaching consensus with the Bargaining council and we feel that it shouldn’t have reached this point where factories are being closed.

The Unity feels that a matter of this nature should have been avoided and that the drastic job losses will have severe negative consequences for the economy of Newcastle. Although we do not support the exploitation of labour we know that CMT companies are right at the bottom of the value chain and it is very difficult for them to increase their prices.

The clothing sector in the whole of South Africa is under severe pressure and according to our information more than 300 companies in South Africa are in a similar predicament where they just can’t pay the minimum wages and other employee benefits. It is strongly felt that the national goverment, and also the local council could have intervened especially where job creation is a national priority.

Newcastle Business Unity hopes that sanity will prevail and that this matter will be re-visited,  and that the stakeholders will be able to reach consensus as the community of Newcastle can not afford that 7000 local jobs could be in danger.

Yours sincerely

   

Freddie Meiring                                                                    SH Majola

President                                                                                President

Newcastle Sakekamer                                                           NAFCOC

“The Unified Voice of Business in Newcastle”

A partnership between the Newcastle Chinese Chamber of Commerce & Industry, Newcastle Sakekamer & NAFCOC Newcastle